Document Content

CIRCULAR

Guiding the special consumption tax refund for exported home-made cigarettes bearing foreign marks, for which special consumption tax has been paid in the country

Pursuant to Articles 3, 4 and 12 of the Government’s Decree No. 149/2003/ND-CP of December 4, 2003, detailing the implementation of the Law on Special Consumption Tax (SCT);

Pursuant to the Government’s Decree No. 77/2003/ND-CP of July 1, 2003, defining the functions, tasks, powers and organizational structure of the Ministry of Finance;

In furtherance of the Prime Minister’s instructions in the Government Office’s Official Letter No. 68/VPCP-KTTH on SCT refund for exported home-made cigarettes bearing foreign marks, the Ministry of Finance hereby guides the SCT refund as follows:

I. Subjects eligible for SCT refund

Business enterprises that directly export cigarettes bearing foreign marks and produced in Vietnam shall be refunded SCT amounts already paid at the production stage.

II. Conditions for cigarette-exporting enterprises to be refunded SCT

Business enterprises that export home-made cigarettes bearing foreign marks shall be refunded the SCT amounts already paid at the production stage if they fully meet the following conditions:

1. Cigarette-exporting enterprises have a total own capital amount of VND 20 billion or more each. The total own capital amount shall comply with indicator coded 410 in the accounting balance sheet on December 31, 2005, determined by an independent auditing agency. For state enterprises, if the independent auditing agency’s results are unavailable, this indicator shall comply with the data certified by financial management agencies directly managing them.

2. Cigarette-exporting enterprises have well observed the tax laws, the Commercial Law, and have not committed tax or commercial frauds since January 1, 2005.

3. Cigarette-expanding enterprises have been proposed in writing by ministries, branches or central agencies (for enterprises which are set up under decisions of, or granted business registration certificates by, central agencies) or provincial/municipal People’s Committees (for enterprises which are set up under decisions of, or granted business registration certificates by, local agencies) to the Ministry of Finance and the Ministry of Trade for the SCT refund for exported home-made cigarettes bearing foreign marks.

4. Cigarette-exporting enterprises have the function of trading in cigarettes as stated in their business registration certificates and have directly exported 10 million or more packs of home-made cigarettes bearing foreign marks within 3 years before the effective date of this Circular. The quantities of exported cigarettes shall be determined according to such export vouchers as written export contracts, via-bank payment vouchers and exported goods declarations certified by customs offices.

5. Exported cigarettes eligible for the SCT refund must be those directly bought by cigarette-exporting enterprises from Vietnam-based branches of foreign cigarette companies or traders being grade-I distributors of such branches (having cigarette-trading permits granted by the Ministry of Trade as stated in List I).

6. There must be written contracts on the export of cigarette as prescribed by the Commercial Law, cigarettes must be exported through international seaports, transported and delivered in containers.

7. Payment for exported cigarettes must be made by foreign purchasers via banks in a freely convertible foreign currency in the form of letter of credit (L/C) or telegraphs of transfer (TTr); in cases where cigarette-exporting enterprises purchase cigarettes of business establishments in Vietnam for export, payment must be made by mode of bank transfer.

8. Enterprises must separately account incomes generated from the export of cigarette for enterprise income tax declaration and payment before offsetting them with losses arising from other business activities. Enterprises exporting cigarettes bearing foreign marks produced in Vietnam must calculate the refunded SCT amounts into incomes for determining incomes liable to enterprise income tax.

III. Determination of to be-refunded SCT amounts

To be-refunded SCT amounts shall be determined according to the quantities of cigarettes actually exported and SCT amounts already declared and paid at the production stage.

To be-

Quantity of

SCT amount already

refunded =

cigarette actually

X declared and paid at the

SCT amount

exported (packs)

production stage for 01 pack

SCT amount already declared

SCT-

SCT rate

and paid at the production

= calculating price

x applicable to

stage for 01 pack

of 01 pack

cigarettes

The SCT amounts already paid at the production stage shall be determined by the Ministry of Finance (the General Department of Taxation) according to the amounts already declared and paid by cigarette-producing establishments.

- SCT-calculating prices which shall be used as a basis for determining to be-refunded SCT amounts are SCT-calculating prices used by production establishments for SCT declaration and payment at the time stated in cigarette sale invoices issued by Vietnam-based branches of foreign cigarette companies or traders being their grade-I distributors to cigarette-exporting enterprises.

- SCT rates applicable to cigarettes shall comply with the provisions of the Finance Ministry’s Circular No. 115/2005/TT-BTC of December 16, 2005, guiding the implementation of the Government’s Decree No. 156/2005/ND-CP of December 15, 2005, amending and supplementing decrees detailing the implementation of the SCT Law and the Value Added Tax Law.

Where cigarette-producing establishments adjust SCT-calculating prices, the General Department of Taxation shall determine and notify the SCT-calculating prices to provincial/municipal Tax Departments for use as a basis for determining to be-refunded SCT amounts which, however, must not exceed SCT amounts already declared and paid by production establishments into the state budget.

IV. Order and procedures for determining subjects eligible for SCT refund

- Cigarette-exporting enterprises shall send to Tax Departments of provinces or centrally-run cities where they are headquartered written requests for SCT refund for exported cigarettes, clearly stating their satisfaction of the conditions guided at Points 1, 2, 3 and 4, Section II; their business registration certificates (copies certified and stamped with “true copy” seal), and written opinions of the provincial/municipal Trade and Tourism Services on their observance of the Commercial Law.

Based on written requests of cigarette-exporting enterprises, the provincial/municipal Tax Departments shall inspect the conditions of cigarette-exporting enterprises according to the guidance at Points 1, 2, 3 and 4, Section II, to determine subjects eligible for the refund of SCT on exported cigarettes and send written notices thereon to enterprises, the Ministry of Finance and the Ministry of Trade.

V. Dossiers of application for SCT refund

Enterprises exporting cigarettes which bear foreign marks and are produced in Vietnam, that are eligible for SCT refund, shall send written requests, made according to a set form, to Tax Departments of provinces or centrally-run cities where they are headquartered, together with the following papers:

- A list of cigarette purchase invoices, made according to a set form;

- A list of invoices on the sale of exported cigarette, made according to a set form;

- A list of quantities of cigarette delivered, warehoused and left in stock, made according to a set form;

- Reports on exported cigarette-trading results, made according to a set form. For expenses related to exported cigarettes, which cannot be separately accounted, enterprises shall calculate them according to a certain percentage (%) on turnovers. Where expenses and incomes related to the volumes of exported cigarettes have not yet been fully accounted (for the reason that SCT amounts have not yet been refunded), enterprises shall make accounting according to temporarily calculated results.

- Exported goods declarations, certified by customs offices on the quantities of cigarette bearing foreign marks and produced in Vietnam, which were actually exported through international seaports in containers as provided for by the General Department of Customs.

- Written goods sale contracts between exporting enterprises and foreign traders; written contracts on the purchase of cigarettes bearing foreign marks and produced in Vietnam between exporting enterprises and Vietnam-based branches of foreign cigarette companies or their grade-I distributors, which are compliant with the provisions of the Commercial Law.

- Vouchers on payment made by foreign purchasers via commercial banks by mode of letter of credit (L/C), telegraphs of transfer (TTr), which are compatible with current regulations of the State Bank and terms of the export contracts. Vouchers on payment by mode of bank transfer made by cigarette-exporting enterprises for cigarettes purchased from Vietnam-based branches of foreign cigarette companies or traders being their grade-I distributors.

Tax-refund dossiers and papers submitted by enterprises to provincial/municipal Tax Departments must be originals; particularly for declarations of exported and imported goods, commercial contracts and payment vouchers, which are copies, they must be affixed with “true copy” stamp by enterprises. Enterprises shall bear responsibility before law for the data and vouchers related to tax-refund dossiers.

Tax-refund dossiers shall be made for each quarter. Particularly for cases where cigarette-exporting enterprises have exported cigarettes right in the quarter when this Circular takes effect, they shall make dossiers of application for tax refund for cigarettes exported in the period from the effective date of this Circular to the end of the quarter.

VI. Order and competence for SCT refund

Provincial/municipal Tax Departments, after receiving enterprises’ dossiers of application for SCT refund, shall carry out inspection at enterprises:

+ To identify whether the subjects are eligible for SCT refund.

+ To inspect the dossiers, procedures and conditions for tax refund in strict accordance with the guidance in this Circular.

Particularly for the conditions on own capital, Tax Departments shall check and re-determine the data before issuing each tax-refund decision.

+ To inspect the volume of purchased cigarettes, the actually exported quantities, and invoices and vouchers related to exported cigarettes.

+ To determine SCT amounts to be refunded according to regulations.

Within 15 working days after receiving complete dossiers of application for tax refund from enterprises, provincial/municipal Tax Departments shall examine the dossiers and procedures related to SCT refund at enterprises. The inspection at enterprises shall be carried out in strict accordance with the current inspection and examination procedures. Provincial/municipal Tax Departments shall issue tax-refund decisions to enterprises within 10 days after completing the inspection. In cases where enterprises are ineligible for SCT refund, provincial/municipal Tax Departments shall reply in writing, clearly stating the reasons therefor.

VII. Several other provisions

1. Based on the list of Vietnam-based branches of foreign cigarette companies or traders being their grade-I distributors that have cigarette trading permits in List I granted by the Ministry of Trade, the Ministry of Finance (the General Department of Taxation) shall notify provincial/municipal Tax Departments of Vietnam-based branches of foreign cigarette companies or their grade-I distributors, which shall serve as a basis for determining the conditions for SCT refund.

2. Money used for SCT refund for exported cigarettes shall be apportioned from SCT refund fund.

VIII. Implementation effect

This Circular takes effect 15 days after its publication in “CONG BAO.” The SCT refund guided in this Circular shall apply to cigarettes, which bear foreign trademarks, are produced in Vietnam and exported as from the effective date of this Circular.